A reverse mortgage is a loan secured by your home. It must be your primary residence (that means that you, as the borrower, must live in the home for as long as you have the loan).

This type of loan allows borrowers to access a portion of their tax-free equity without making monthly mortgage payments. No payment is required until the last surviving homeowner moves, dies, or sells the home.

The borrower maintains the home’s title and is responsible for property taxes and homeowner’s insurance payments. The amount borrowers receive is determined by the HUD calculations based on the age of the borrowers (most specifically, the age of the youngest borrowing or non-borrowing spouse), the value of the home or the HUD lending limit, whichever is less, and the interest rates in effect at the time.

Borrowers never have to make a monthly payment on reverse mortgage loans. There is never a prepayment penalty, so they can make any payment they wish, including repaying the loan at any time.